When economists collect statistics on production, income, investment, and savings

• National Income Accounting

• Gross Domestic Product

• Expenditures Approach

• Income Approach

The dollar value of all final goods and services produced within a country's borders in one year. Most important measure of economic growth

• Gross Domestic Product

• GDP Per Capita

• Real GDP

• Nominal GDP

GDP divided by the population. It identifies on average how many products each person makes. Best measure of standard of living.

• GDP Per Capita

• Income Approach

• Labor Force Participation Rate

• Problems with the CPI

Who is hurt by unanticipated inflation?

• -Lenders (people who lend money at fixed interest rates)

  -People with fixed incomes

  -Savers

• -Borrowers (people who borrow money)

  -A business where the price of the product increases faster than the price of resources

• -Above 16 years

  -Able/willing to work

  -Not institutionalized (jail/hospital)

  -Not in military, in school full time, or retired

What are the criticisms of the unemployment rate?

• Discouraged workers: some people are no longer looking for a job because they have given up.

  Underemployed workers: Someone who wants more hours but can't get them is still considered employed

• Percent of population in the labor force. If people leave the labor force, the unemployment rate falls.

• Index numbers assigned to each year that show how prices have changed relative to a specific base year (base year given 100)

• Unemployment caused by a recession. As demand for goods/services falls, demand for labor falls and workers are fired

How do you calculate the unemployment rate?

• Percent of people unemployed(# unemployed)/(# in labor force) x 100

• Frictional + structural unemployment

• % change in prices = (year 2 - year 1)/(year 1) x 100

Temporary unemployment or being between jobs. Individuals are qualified workers with transferable skills

• Frictional Unemployment

• Structural Unemployment

• Cyclical Unemployment

Workers DO NOT have transferable skills and these jobs won't come back

• Structural Unemployment

• Frictional Unemployment

• Cyclical Unemployment

Unemployment caused by a recession

• Cyclical Unemployment

• Structural Unemployment

• Frictional Unemployment

Who is in the labor force?

• -Above 16 years; -Able/willing to work

• All of these are correct.

• -Not institutionalized (jail/hospital)

• -Not in military, in school full time, or retired